Garware Wall Ropes’ (GWRL) Q1FY09 numbers are marginally above our estimates. Net sales recorded a growth of 21% year-on-year (y-o-y) to Rs1.2 billion, 5.5% ahead of our estimate as revenue contribution from geo-synthetics stepped up to 29% in Q1FY09 as against 26% in the same period last year.
The share of export sales remained stable, comprising 32% of revenue during the quarter. Lower margins in the geo-synthetics business saw the overall EBIDTA margin dipping by 10bps to 10.6%, though this bettered our estimate of a 50bps decline.
Going forward, we expect a 23% CAGR in topline over FY08-FY10; higher execution in the geo-synthetics business may take revenues ahead of our projections.
At the current price, the stock discounts its FY09E and FY10E EPS by 5.9x and 4.8x respectively. We maintain a Buy call on the stock but are revising our DCF-based target price from Rs210 to Rs173 on increased cost of debt and risk free return assumptions.